2012 (11) TMI 436 - AT - Central Excise

Short levy of the duty - Alleged that there was wrong assessment of the goods cleared by the appellant - Held that - Since notices were not issued in terms of the C.B.E. & C. circular even after 1-3-2002 within the normal period therefore the department had to be allowed to suffer for its revenue loss. Since the payment made by the party was on written communication by way of demand which on merit was sustainable and payable and hence the demand so paid is hereby; held as legal, proper, sustainable and maintainable. They do not deserve any refund neither on merit nor on limitation. However, jacking them with further liabilities after limitation period is over, is not justified and cannot be maintained and sustained. Therefore, the proceedings started by issuance of show cause notice dated 10-9-2004 and tried to be fortified or enhanced by corrigendum are held to be inappropriate and illegal. Show cause notice dated 10-9-2004 as well as corrigendum dated 17-6-2005 and 28-7-2005 were without any authority of law and inappropriate and illegal - demands and other proposed cause of actions are barred by limitation - appeal is allowed

Summary

Issues:
1. Confirmation of demand of amount paid during pendency of case.
2. Limitation period for demand of duty.

Analysis:
1. The appeal was filed against an Order-in-Original dated 31-10-2005, where the appellant, a 100% EOU engaged in manufacturing Cotton Denim Fabrics, was accused of short levy of duty for the period 1-4-2000 to 31-3-2002. The appellant contested the show cause notice on limitation and merit grounds. The adjudicating authority confirmed the amounts deposited by the appellant during the case, invoking the extended period of limitation. The appellant challenged this confirmation, arguing that they could raise legal points even if payments were made during the pendency of the case.

2. The main issue revolved around whether the confirmation of the demand of the amount paid by the appellant during the pendency should be upheld or set aside, considering the entire demand was time-barred. The adjudicating authority's findings highlighted the delay in action by the department, questioning the timeliness of the demand raised on 10-9-2004. The authority emphasized that the demands and proposed actions were barred by limitation under Section 11A of the Central Excise Act, 1944. The authority also noted that no appeal was filed by the Revenue authorities against these findings, indicating finality of the limitation issue.

3. The adjudicating authority's conclusion was that the show cause notice and corrigendum were belated and barred by limitation. As the Revenue authorities did not appeal against these findings, the confirmation of the demand of the amount paid by the appellant during the case was set aside. The appeal was allowed, granting consequential relief to the appellant.

This judgment clarifies the importance of adhering to limitation periods in demanding duties and highlights the significance of challenging such demands on legal grounds, even if payments are made during the pendency of a case. The decision emphasizes the finality of findings when no appeals are filed by relevant authorities, ultimately leading to the allowance of the appellant's appeal in this case.